U.S. stocks opened lower on Wednesday, July 30, as investors headed into the Federal Reserve’s afternoon rate decision under heavier pressure. The move was tied largely to a surge in oil prices after Donald Trump said in a Fox News interview that the United States would carry out a forceful strike on Iran in response to an assault on personnel in the Middle East. Treasury yields also moved higher, with the 10-year yield edging up to 4.62% and the more policy-sensitive 2-year yield rising about 3 basis points to 4.3%, both near their highs for the year. Traders are looking for signals from the Fed, led by Warsh, that it views the oil shock linked to the Iran war as temporary and is not in a hurry to raise rates again this year. At the same time, some views in the market hold that a rate hike would also be reasonable and could help calm the long end of the yield curve by showing the central bank’s resolve on inflation.
U.S. stocks opened lower on Wednesday, July 30, adding pressure ahead of the Federal Reserve’s rate decision later in the day.
The negative tone was driven mainly by a sharp rise in oil prices. Earlier, Donald Trump said in an interview with Fox News that the United States would carry out a forceful strike on Iran in response to an assault on personnel in the Middle East.
Treasury yields also moved up. The 10-year U.S. Treasury yield edged higher to 4.62%, close to its high for the year. The 2-year Treasury yield, which is more sensitive to Fed policy, rose about 3 basis points to 4.3%, also near its annual peak.
Traders broadly want the Federal Reserve, led by Warsh, to signal that it sees the oil-price shock caused by the Iran war as temporary and will not rush to raise rates again this year.
Some views also hold that a rate hike would be reasonable and could help steady the long end of the yield curve by showing the Fed’s determination to contain inflation.
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